Dear Gregory,

When it comes to protecting your hard-earned money and property, it is important to have the right plan, which can include a number of tools for your unique situation. One tool that might benefit you is using a limited liability company (LLC) to own some of your accounts and property.

What is a limited liability company?

An LLC is a business structure that can own a variety of accounts and property. The LLC is owned by members who contribute money or property to the LLC. You can have a single-member-owned LLC or a multimember-owned LLC. If there is more than one member, management of the LLC can either be carried out by each member or the members can elect a manager.

What can an LLC own?

When people think of an LLC, they assume that it is a structure to operate a business. However, many types of accounts and property can benefit from being owned by an LLC:

●     Real estate. An LLC can own property such as a second home, rental property, or property that has been in a family for generations.

●     Investments. In some cases, an LLC can be formed to allow multiple people to pool their money and invest it with a larger volume.

●     Expensive and risky property. An LLC can own items such as airplanes and boats.

Why should I consider using an LLC in my estate plan?

Asset Protection

Because the LLC is a separate entity, typically the LLC’s creditors can only go after the LLC’s money and property, not the member’s personal accounts or property. Also, if the proper formalities are in place, the member’s personal creditors may not be able to reach the LLC’s accounts and property to satisfy the member’s personal debts. Note: in some states, a single-member LLC does not enjoy the same protection from the member’s personal creditors. The rationale of these laws is that your creditors should be able to seek relief through your LLC interests to satisfy their claims because there are no other members that will be negatively impacted by seizure of money and property owned by the LLC.

Probate Avoidance

Anything that is owned by the LLC, either retitled in the name of the LLC during your lifetime, bought by the LLC, or transferred by operation of law at your death, will not go through the public, costly, and time-consuming probate process. The probate process only transfers accounts and property that you owned at your death. By using an LLC, the LLC—not you—owns the accounts and property. However, if you own a membership interest in your own name, the transfer of your membership interest at your death may need to go through the probate process.

What are my next steps?

We understand how important it is to protect yourself, your loved ones, and all that you have worked so hard to earn. A comprehensive estate plan can help accomplish your goals by implementing the right strategies for your situation. If you would like to explore how a limited liability company can help you plan for your future and the future of your loved ones, please reach out to me. 

Sincerely,

Gregory D. Robinson, Esq.